Cherry Hill Mortgage Investment Corporation Announces Third Quarter 2019 Results
Third Quarter 2019 and Subsequent Highlights
-
GAAP net loss applicable to common stockholders of
$5.4 million , or$0.32 per share -
Core earnings attributable to common stockholders of
$7.0 million , or$0.41 per share -
Book value of
$17.01 per share atSeptember 30, 2019 , a 1.3% increase fromJune 30, 2019 , net of the Company’s third quarter dividend -
Declared regular common dividend of
$0.40 per share; annualized common dividend yield at market close was 11.4% atNovember 11, 2019 -
Aggregate portfolio leverage stood at 5.9x at
September 30, 2019 -
Added
$100 million of uncommitted MSR financing capacity in the third quarter -
Amended Ginnie Mae MSR Term Facility subsequent to quarter end to provide an additional
$10 million of borrowing capacity to fund advances on the pledged Ginnie Mae MSRs
“We were very active in managing our portfolio to appropriately mitigate risk and protect book value during another volatile quarter,” said
Operating Results
Cherry Hill reported GAAP net loss applicable to common stockholders for the third quarter of 2019 of
With the evolving composition of the portfolio over the past few years, Cherry Hill updated its core earnings methodology to provide a more accurate reflection of the earnings power of the business. Core earnings attributable to common stockholders for the third quarter of 2019 were
Three Months Ended September 30, |
|||||||||
2019 |
|
2018 |
|||||||
|
|
(unaudited) |
|
(unaudited) |
|
||||
Income |
|||||||||
Interest income |
|
$ |
19,383 |
|
|
$ |
15,323 |
|
|
Interest expense |
12,635 |
|
9,257 |
|
|||||
Net interest income |
|
|
6,748 |
|
|
|
6,066 |
|
|
Servicing fee income |
18,687 |
|
14,017 |
|
|||||
Servicing costs |
|
|
4,102 |
|
|
|
2,981 |
|
|
Net servicing income |
|
14,585 |
|
|
11,036 |
|
|||
Other income (loss) |
|
|
|
|
|
|
|
||
Realized gain (loss) on RMBS, net |
275 |
|
(428 |
) |
|||||
Realized gain (loss) on derivatives, net |
|
|
12,627 |
|
|
|
(707 |
) |
|
Realized gain on acquired assets, net |
54 |
|
- |
|
|||||
Unrealized gain (loss) on derivatives, net |
|
|
(2,133 |
) |
|
|
8,807 |
|
|
Unrealized gain (loss) on investments in MSRs |
(37,514 |
) |
6,218 |
|
|||||
Total Income (Loss) |
|
|
(5,358 |
) |
|
|
30,992 |
|
|
Expenses |
|||||||||
General and administrative expense |
|
|
1,194 |
|
|
|
1,165 |
|
|
Management fee to affiliate |
2,042 |
|
1,599 |
|
|||||
Total Expenses |
|
|
3,236 |
|
|
|
2,764 |
|
|
Income (Loss) Before Income Taxes |
|
(8,594 |
) |
|
28,228 |
|
|||
Provision for (Benefit from) corporate business taxes |
|
|
(5,643 |
) |
|
|
729 |
|
|
Net Income (Loss) |
|
(2,951 |
) |
|
27,499 |
|
|||
Net (income) loss allocated to noncontrolling interests in Operating Partnership |
|
|
43 |
|
|
|
(364 |
) |
|
Dividends on preferred stock |
2,459 |
|
1,372 |
|
|||||
Net Income (Loss) Applicable to Common Stockholders |
|
$ |
(5,367 |
) |
|
$ |
25,763 |
|
|
Net Income (Loss) Per Share of Common Stock |
|||||||||
Basic |
|
$ |
(0.32 |
) |
|
$ |
1.62 |
|
|
Diluted |
$ |
(0.32 |
) |
$ |
1.62 |
|
|||
Weighted Average Number of Shares of Common Stock Outstanding |
|
|
|
|
|
|
|
||
Basic |
16,883,816 |
|
15,864,774 |
|
|||||
Diluted |
|
|
16,896,605 |
|
|
|
15,873,030 |
|
|
_______________
Dollar amounts in thousands, except per share amounts. Certain prior period amounts have been reclassified to conform to current period presentation.
Net unrealized gain on the Company’s RMBS portfolio for the third quarter 2019 was approximately
Three Months Ended September 30, |
|||||||||
2019 |
|
2018 |
|||||||
|
|
(unaudited) |
|
(unaudited) |
|
||||
Net Income (Loss) |
$ |
(2,951 |
) |
$ |
27,499 |
|
|||
Other comprehensive income: |
|
|
|
|
|
|
|
||
Net unrealized gain (loss) on RMBS |
|
15,826 |
|
(13,656 |
) |
||||
Reclassification of net realized gain (loss) on RMBS included in earnings |
|
|
(275 |
) |
|
|
428 |
|
|
Other comprehensive income (loss) |
|
|
15,551 |
|
|
(13,228 |
) |
||
Comprehensive income |
|
$ |
12,600 |
|
|
$ |
14,271 |
|
|
Comprehensive income attributable to noncontrolling interests in Operating Partnership |
203 |
|
187 |
|
|||||
Dividends on preferred stock |
|
|
2,459 |
|
|
|
1,372 |
|
|
Comprehensive income attributable to common stockholders |
$ |
9,938 |
|
$ |
12,712 |
|
_______________
Dollar amounts in thousands. Certain prior period amounts have been reclassified to conform to current period presentation.
Portfolio Highlights for the Quarter Ended
The Company realized servicing fee income of
The RMBS portfolio had a book value of
In order to mitigate duration risk and interest rate risk associated with the Company’s RMBS and MSRs, Cherry Hill used interest rate swaps, swaptions, TBAs and Treasury futures. At quarter end
As of
Dividends
On
Core Earnings
Core earnings is a non-GAAP financial measure and is currently defined by the Company as GAAP net income (loss), excluding realized gain (loss) on RMBS, realized and unrealized gain (loss) on investments in MSRs (net of any estimated MSR amortization), realized and unrealized gain (loss) on derivatives and realized (gain) loss on acquired assets. Core earnings is adjusted to exclude outstanding LTIP-OP Units in our
The following table provides a reconciliation of net income (loss) to core earnings for the three months ended
Three Months Ended September 30, |
|||||||||
2019 |
|
2018 |
|||||||
|
|
(unaudited) |
|
(unaudited) |
|
||||
Net Income (Loss) |
$ |
(2,951 |
) |
$ |
27,499 |
|
|||
Realized loss (gain) on RMBS, net |
|
|
(275 |
) |
|
|
428 |
|
|
Realized loss (gain) on derivatives, net |
|
(12,627 |
) |
707 |
|
||||
Realized gain on acquired assets, net |
|
|
(54 |
) |
|
|
- |
|
|
Unrealized loss (gain) on derivatives, net |
2,133 |
|
(8,807 |
) |
|||||
Unrealized loss (gain) on investments in MSRs, net of estimated MSR amortization |
29,105 |
|
(1) |
|
(10,260 |
) |
|
||
Tax (benefit) expense on unrealized (loss) gain on MSRs |
(5,722 |
) |
725 |
|
|||||
Total core earnings: |
|
$ |
9,609 |
|
|
$ |
10,292 |
|
|
Core earnings attributable to noncontrolling interests in Operating Partnership |
(153 |
) |
(136 |
) |
|||||
Dividends on preferred stock |
|
|
2,459 |
|
|
|
1,372 |
|
|
Core Earnings Attributable to Common Stockholders |
$ |
6,997 |
|
$ |
8,784 |
|
|||
Core Earnings Attributable to Common Stockholders, per Diluted Share |
|
$ |
0.41 |
|
|
$ |
0.55 |
|
|
GAAP Net Income (Loss) Per Share of Common Stock, per Diluted Share |
$ |
(0.32 |
) |
$ |
1.62 |
|
_________
Dollar amounts in thousands, except per share amounts. Certain prior period amounts have been reclassified to conform to current period presentation.
1 Beginning with this reporting period, the Company has refined the MSR amortization method utilized in determining the amount of realized and unrealized gain (loss) on investments in MSRs, used by the Company to calculate core earnings. MSR amortization refers to the portion of the change in fair value of the MSRs that is primarily due to the realization of cashflows or runoff. The new method increases the MSR amortization amount taken into account for the reporting period to better reflect current and expected market conditions and includes an adjustment for any gain or loss on the capital used to purchase the MSR. MSR amortization for periods that ended prior to
Additional Information
Additional information regarding Cherry Hill’s financial condition and results of operations can be found in its Quarterly Report on Form 10-Q for the quarter ended
Webcast and Conference Call
The Company’s management will host a conference call today at
The conference call may be accessed by dialing 1-877-407-9716 (from within the U.S.) or 1-201-493-6779 (from outside of the U.S.) ten minutes prior to the scheduled start of the call; please reference “Cherry Hill Third Quarter 2019 Earnings Call.”
A telephonic replay of the conference call will also be available two hours following the completion of the call through
About
Forward-Looking Statements
This press release contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws, including, among others, statements relating to the Company’s long-term growth opportunities and strategies, expand its market opportunities and create its own Excess MSRs and its ability to generate sustainable and attractive risk-adjusted returns for stockholders. These forward looking statements are based upon the Company’s present expectations, but these statements are not guaranteed to occur. For a description of factors that may cause the Company's actual results or performance to differ from its forward-looking statements, please review the information under the heading “Risk Factors” included in the Company's Annual Report on Form 10-K for the year ended
View source version on businesswire.com: https://www.businesswire.com/news/home/20191112005975/en/
Source:
Cherry Hill Mortgage Investment Corporation
Investor Relations
(877) 870-7005
InvestorRelations@chmireit.com